UK 'short-changed' by EU funding

17 Jul 12

MPs are calling for reforms to the way certain European funding is distributed, after a report revealed the UK receives less money than it originally puts in.

The Communities and Local Government (CLG) committee is meeting in Whitehall to discuss the European Regional Development Fund (ERDF) and how power can be handed to the UK to retain direct control over where the development money is spent.

The ERDF is the EU's main tool to reduce economic disparities between the poorest and wealthiest regions. Around €201 billion will be distributed between 2007 and 2013.

The meeting of MPs follows a report by think tank Open Europe, which revealed that Britain will pay around £30 billion to the ERDF between 2007 and 2013, but get back just under £9 billion. Elsewhere, Northern Ireland will pay in £826 million but receive £523 million back.

Open Europe found that of the UK's 37 regions in the EU's classification scheme of where funding is spent, only two were net beneficiaries from the funds. The West Midlands pays £3.55 to the structural funds for every £1 it receives, while Northern Ireland pays in £1.58 for every £1 it gets back.

The CLG committee said the current system - which is decided by the European Commission in Brussels - risked 'stifling regional economic growth'.

MPs are now calling for the Government to help development projects by 'matching' EU funding through the Regional Growth Fund (RGF) and to challenge the current ERDF allocation system.

Clive Betts, Chair of the CLG committee said: "The ERDF is a highly valued source of money for large regeneration and small business development schemes alike, but it can only be used to part-fund projects.

"The abolition of the Regional Development Agencies removed the main source of match funding for ERDF sponsored projects, and the economic downturn has curbed alternative options for match funding even further."

"Longer term the ERDF allocation system also has to change so that the UK can retain direct control over EU regional development money destined to be spent England while continuing to provide funds for use via ERDF in poorer parts of the EU," he added.

MPs hope that changes to the ERDF application rules will be implemented before the next seven-year round of funding begins in 2014.

Talking to the Belfast Telegraph, Pawel Swidlicki of Open Europe, said that he was 'encouraged' that the MPs had backed repatriation, adding that the UK would benefit from the reforms.